Replies to post #59472 on NorthWest Biotherapeutics Inc (NWBO)

[DoGood_DoWell]

Sorry if I don't share your negativity.

Sorry if I believe it is a good thing that NWBO has control over manufacturing and can assure quality and continuity and protection of intellectual property.

Sorry if I don't begrudge people who are working hard to find innovative and safe ways to save or extend people's lives while enjoying good quality of life.

[Poor Man -]

If anyone thinks it is really two totally different organizations with different owners you gots to be kidding

That's about right.

Toucan Capital is the fund that manages both portfolio companies, NWBO and Cognate. We don't know if both companies have exactly the same investors, because we don't know the fund structure at all, only that Linda has dispositive voting control.

But who the specific underlying investors happen to be in the fund(s) is a moot point since Toucan has control over the management and operations of both NWBO and Cognate. Suffice to say that these companies are managed in lock-step with each other.

[TiltMyBrain]

They really should do an in kind merger. That would ease my mind. Northwest paid for the production facilities yet Cognate owns it.

[Rkmatters]

Cognate is not NWBO. And NWBO is not Cognate. Investigators are looking into NWBO's conflict of interest 'pubic' practices. They will not be able to look into all of Cognate's COI private practices. Some maybe, but not all, as again, Cognate is a private entity, and does not equal NWBO.

Initially they may have been each others bloodline, but that changed when Cognate began using NWBO shares as a checkbook. In review of those public transactions it is easy to prove that Cognate (LP) does not make decisions that are in NWBO's shareholders best interest. Here I'll show you a few blatant examples off of SEC statements where Cognate always seems to payout shares ahead of news, in front of potential high stock interest and volume trading days:

As part of Cognate’s compensation package to its managers, NWBO shares have been disposed of:

10. On February 7, 2014, Cognate awarded or transferred 132,540 Common Shares to a consultant and on February 8, 2014, Cognate awarded or transferred 79,630 Common Shares to an employee.

http://www.nwbio.com/nw-bio-present-17th-annual-bio-ceo-investor-conference/

The Annual Bio CEO Investor Conference was announced on February 6 and it took place one trading day later on February 9, 2014. What news was released a short time later

http://www.nwbio.com/nw-bio-receives-recommendation-to-continue-with-phase-iii-gbm-brain-cancer-trial/

Next example:

4. On March 7, 2014, Cognate awarded or transferred 133,333 Common Shares to one of its managers, as an Equity Award, vesting over time, as part of the manager's compensation.
5. On March 7, 2014, Cognate awarded or transferred 120,370 Common Shares to another one of its managers, as an Equity Award, vesting over time, as part of the manager's compensation.
https://www.sec.gov/Archives/edgar/data/1072379/000114420414075189/xslF345X03/v396664_4.xml

What news did they NWBO release one market day later on March 10, 2014?

www.nwbio.com/nw-bio-announces-two-german-approvals-hospital-exemption-for-early-access-program-with-dcvax-l-and-eligibility-of-dcvax-l-for-reimbursement/

Northwest Biotherapeutics (NWBO) Receives 'Very Strong' Endorsement, Summer Street Says
March 10, 2014 1:22 PM EDT

Summer Street analyst Carol Werther maintained a Buy rating and $10.33 price target on Northwest Biotherapeutics (NASDAQ: NWBO) after the company announced this morning that Germany has approved DCVax-L, its Glioblastoma multiforme (GBM) vaccine, for an early access program. The analyst notes this allows NWBO to provide DCVax-L to patients with newly diagnosed or recurrent GBM and to charge full price. This approval has a term of five years, and can be re-applied for and re-issued at the end of that period. The German reimbursement authority will be in charge of submitting applications for reimbursement, not NWBO.

Werther called this a "very strong endorsement from the German government."

Shares of Northwest Biotherapeutics closed at $6.06 yesterday.

Healthcare Stocks Mixed in Afternoon Trade; Northwest Biometrics Jumps 13% After German Regulators OK Cancer Drug
March 10, 2014, 01:04:34 PM EDT By MidnightTrader.com Staff, MT Newswires

Read more: www.nasdaq.com/article/healthcare-stocks-mixed-in-afternoon-trade-northwest-biometrics-jumps-13-after-german-regulators-ok-cancer-drug-cm333838#ixzz46kY9RQak

In company news, Northwest Biotherapeutics ( NWBO) shares rose Monday after the oncology care company received a pair of regulatory approvals from German authorities for its DCVax-L treatment for glioma brain cancers.

The Paul Ehrlich Institute approved a "Hospital Exemption" early access program under Section 4b of German Drug Law, allowing the company to provide the experimental drug treat both Glioblastoma multiforme and lower grade gliomas outside clinical trials as well as charging full price for the medication.

The regulatory body also cleared DCVax-L for reimbursement. The initial approvals have five year terms.

NWBO shares are up nearly 13% at $6.83 apiece in recent trade, pushing to a new intra-day high. The stock has a 52-week range of $2.98 to $20.00 a share.

Where was the shares trading before the news when the managers received their payout? $6.06. At what price did the managers received their payout? At a significant discount, they were recorded at $3.64 a share.

Where was NWBO shares trading at on and after March 10, 2014? Shares reaching a high of $8.25, and closed at a high of $7.85. We have no idea if the February and March issuance were turned about and sold. But talk about timing!

http://www.google.com/finance/historical?cid=667022&startdate=Jan+31%2C+2014&enddate=Mar+11%2C+2014&num=30&ei=GOocV9imL9W_e97ltfAB

The vested portion of shares in both examples are not subject to any lock-up period. No worries, Cognate didn’t really pay for those $3.64 shares they used in their bonus payouts; beyond the hefty paycheck Cognate negotiated free ‘milestones' payouts for themselves:

8. On February 1, 2014, the Company became obligated to issue Cognate 500,000 Common Shares as payment for certain milestones.

https://www.sec.gov/Archives/edgar/data/1072379/000114420414075188/xslF345X03/v396414_4.xml

The payout before news, is it a coincidence? You tell me.

As part of Cognate’s payout to a debt, NWBO shares have been disposed of. Those shares are not subject to any lock-up period and were immediately tradable:

13. Cognate previously entered into a $1.5 million convertible debt financing with unrelated third party investors, secured by Cognate assets, and provided the proceeds of the financings for Northwest Biotherapeutics' programs. The debt was convertible, at the investors' election, into Common Shares owned by Cognate. The third party investors elected to convert the debt and receive repayment in Common Shares rather than in cash and therefore, on August 27, 2014, Cognate transferred 145,068 Common Shares to settle $750,000 in debt notes.
15. On September 15, 2014, Cognate transferred 149,502 Common Shares to settle the remaining $750,000 in debt notes described in footnote 13.

https://www.sec.gov/Archives/edgar/data/1072379/000114420414075189/xslF345X03/v396664_4.xml

On August 27, 2014, Cognate transferred 145,068 of NWBO Common Shares to settle $750,000 in debt, which is the equivalent of repaying the debt at $5.17 a share, a 12% discount to that day’s closing price of $5.87. Those shares cost Cognate $4.00 a share. On September 15, 2014, Cognate transferred 149,502 Common Shares to pay off an aggregate of $750,000 in debt notes. It essentially took just over 4000 more shares to pay off the debt 2.5 weeks later, at $5.02 a share. Were those initial debt repayment in shares potentially hitting the float causing the stock to trade down so the next payout was larger? Maybe.

Once all $1.5 debt was settled in shares, what news did they NWBO release one market day later on September 16, 2014?

www.nwbio.com/first-uk-promising-innovative-medicine-designation-awarded

Northwest Biotherapeutics (NASDAQ: NWBO) 9.3% HIGHER; announced today that its DCVax-L is the first product to receive formal designation as a "Promising Innovative Medicine" (PIM) under the new "Early Access to Medicines Scheme" (EAMS) launched in the UK in April 2014. A PIM is the first step in a 2-step process for early access approval under the EAMS.

Brain cancer 'vaccine' being considered for early NHS access

The timing is unbelievable. If you look at historical pricing chart, someone was selling shares into the news. If I had to guess it was none of us. Instead we were likely buying due to the promising scientific validation.

It was not in shareholder’s best interest for Cognate to use NWBO shares to pay bills and use in compensation bonuses. But, yes, that is their right as a Private entity. The bills were paid out at a 12% discount of market pricing, which may seem reasonable. But the timing of those transactions occurred each time before news. The dates they were given shares represents dates where the ‘manager’ and the ‘third party investor’ obtained the most amount of shares (based on market price - historical pricing proves it too). Waiting until after news hit to payout shares would have been in NWBO’s shareholders benefit, but yet LP did not. Those freely tradable shares, from non-insiders, easily could have hit the float at next day ’news release' and disposed of immediately into volume allowing the recipient to benefit immensely by stock day highs. They may have been unaware that news was coming, but LP with her COI ties to NWBO would have known that Cognate timed it right for them.

http://www.google.com/finance/historical?cid=667022&startdate=Aug+20%2C+2014&enddate=Sep+19%2C+2014&num=30&ei=JuocV_GZB5Khe76sj6gP

Adam Feuerstein tried to point out one of Cognate's most recent transactions, below. Stock traded at an all-time high back then, only to come down. I highly doubt it was a coincidence.

http://www.google.com/finance/historical?cid=667022&startdate=Jul+1%2C+2015&enddate=Jul+31%2C+2015&num=30&ei=sfAcV9DtNKqEee-Mk4gC

Northwest Bio Shareholders May Have Been Undercut by CEO

By Adam Feuerstein 07/09/15 — 12:26 PM EDT

BETHESDA, Md. (TheStreet) -- Northwest Biotherapeutics(NWBO) CEO Linda Powers is selling company stock at large discounts to repay loans made to an affiliated, privately held company she controls.

Some of the money private investors loaned to Powers' private company, Cognate BioServices, was used to pay for Northwest Bio programs. The loans were later repaid by Cognate with Northwest Bio stock priced significantly below market value, allowing the investors to double their money in one year, according to a new filing with the Securities and Exchange Commission.

Cognate is the cellular processing firm majority owned by Powers through a venture capital firm. She is also chairperson, CEO, principal financial officer and largest shareholder of Northwest Bio, which pays Cognate to manufacture its experimental cancer vaccines and perform other research and development duties.

The unusual structure of the loans negotiated by Powers does not violate securities laws. Lending money to Cognate, however, allowed the investors to receive more generous repayment terms with less disclosure than if they had dealt directly with Northwest Bio, where some of their money ended up anyway. And the discounted Northwest Bio stock used by Powers to repay the Cognate loans undermined the market value of the stock held by other investors.

Independent auditors have previously warned investors about problems with Northwest Bio's internal auditing and financial reporting procedures. Among many "material weaknesses" of the company, auditors cited related party transactions Powers negotiates with herself as both the company's CEO and as the majority owner of Cognate, according to Northwest Bio's most recent annual report filed in March.

Now comes new details about financial deals in which Powers' Cognate acts as a de facto cash-transfer agent between unidentified investors and Northwest Bio. The loans were disclosed in an SEC Form 4 filed July 2 by Powers in her role as a Cognate director.

In June and July 2014, an investor lent Cognate $5 million, structured as two convertible loans of $2.5 million apiece. The $5 million lent by the investor to Cognate was passed through to fund Northwest Bio programs. One year later, on June 30, 2015, Cognate repaid the loans. Instead of cash, the investor received 1,118,092 shares of Northwest Bio stock owned by Cognate, according to the SEC filing.

On the day of the loan conversion, Northwest Bio shares closed $9.93, which valued the shares received by the investor at more than $11.1 million. The shares are freely tradable.

The same SEC filing also documents a separate convertible debt deal in which an investor lent Cognate $3 million, later repaid with Northwest Bio stock owned by Cognate valued at $6.4 million.

In total, $8 million in loans to Cognate were repaid with Northwest Biotherapeutics stock valued at more than $17 million.

The investor(s) who received the generous repayment terms on their loans are not identified in the SEC filing and Northwest Bio did not respond to questions about the financings.

The identity of the investors is important because proceeds of two of the Cognate loans negotiated by Powers were funneled to Northwest Bio programs. The repayment terms of the loans also show Powers negotiating financing deals that undercut the value of Northwest Bio shares, while providing the investors with a 100%-plus return on their initial investment. This may have been Powers' only or best way to raise money for Northwest Bio programs at that time, but the company hasn't explained why.

The two convertible loans totaling $5 million that were repaid with 1.1 million shares of Northwest Bio stock sets the effective conversion rate -- when negotiated in June and July 2014 -- at $4.47 per share.

But during that two-month period, Northwest Bio stock traded at a low of $5.71 per share and a high of $7.66 per share.

In effect, Powers, using Cognate as a middleman, raised $5 million for Northwest Bio at a 20%-40% discount to its stock price at that time. Whether or not proceeds from the separate $3 million convertible loan were also passed through to Northwest Bio was not disclosed in the SEC filing.

Only by using Cognate as the financing vehicle -- and not dealing directly with Northwest Bio -- was the investor able to secure the generous repayment terms. Had the investor negotiated directly with Northwest Bio, the conversion price on any convertible loan would have been set at a premium to the current value of the stock -- standard practice for such financings dictated by the fiduciary responsibilities to current shareholders.

As of June 30, Cognate held 18.4 million shares of Northwest Bio plus another 10.4 million shares underlying warrants currently exercisable, according to SEC filings. When Cognate performs work for Northwest Bio, payment is made with a mix of cash and stock.

In 2014, Northwest Bio paid Cognate $18.7 million in cash and another $21.3 million in stock-based compensation for work performed -- almost half the company's' total R&D expenses for the year, according to related-party transactions disclosed in Northwest Bio's annual report filed with the SEC.

The Northwest Bio shares used to compensate Cognate are set a fixed price of $4 -- a large discount to the prevailing market price.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships.

The SEC statement referenced in this article:

https://www.sec.gov/Archives/edgar/data/1072379/000114420415040971/xslF345X03/v414855_4.xml

1. Cognate entered into a $3 million convertible debt financing with an unrelated third party investor, secured by Cognate assets. The debt was convertible, at the investors' election, into common shares of Northwest Biotherapeutics restricted stock owned by Cognate. The third party investors elected to convert the debt and receive repayment in Common Shares rather than in cash. Therefore, on June 30, 2015, Cognate transferred 650,000 restricted common shares of Northwest Biotherapeutics, Inc.to this third party to settle the debt..
2. Does not include 10,432,387 shares of common stock underlying currently exercisable warrants.
3. Cognate entered into two convertible loans, each in the amount of $2,500,000, to an unrelated third party investor in June and July, 2014, and provided the proceeds of the financings for Northwest Biotherapeutics programs. The debt was secured by shares of Northwest Biotherapeutics owned by Cognate and was convertible, at the investors' election, into Northwest Biotherapeutics, Inc. common shares owned by Cognate at a fixed conversion price. The third party investors elected to take repayment in Common Shares rather than in cash. Therefore, on June 30, 2015, Cognate transferred 1,118,092 Common Shares to settle the debt notes..